Health Alliance Plan’s entry into the West Michigan market comes amid a broader strategic push to grow and become a larger statewide player for employee health benefits.
Other market entries around Michigan will follow as Detroit-based HAP looks to build a broader footprint across Michigan with a “three-year strategic, very aggressive growth opportunity,” said President and CEO Michael Genord.
“Our value is statewide and for too long we focused on Southeastern Michigan,” Genord said in an interview with MiBiz. “We see the great opportunity that we can bring to the West Michigan market and all of Southwest Michigan, and then strategically being very thoughtful about building relationships across the state and expanding across the state.”
HAP first moved into the West Michigan market this year with a Medicare Advantage plan formed with Mercy Health that enrolled 1,700 people in its first year in Kent, Ottawa, Muskegon and Oceana counties. HAP now is introducing commercial health plans in West Michigan for small and large employers for 2021.
Owned by Henry Ford Health System, HAP believes West Michigan can benefit from additional competition in the market, which is now dominated by Blue Cross Blue Shield of Michigan and Grand Rapids-based Priority Health.
“Henry Ford Health System and HAP have always been a huge proponent of competition in the market. Where you bring competition, you drive innovation, you drive quality, and we know if you innovate and you drive quality, the end result is you have lower health care costs as we get further upstream in peoples’ health care journey,” Genord said. “This part of the area would benefit from additional competition in the market and diversity and bringing other thought leaders to the community to partner with organizations to deliver value disruption.”
The third-largest health plan in Michigan, HAP this month began quoting large group health plans to employers in Kent, Ottawa, Muskegon and Oceana counties. HAP introduced two types of large group policies: preferred provider organization (PPO) and exclusive provider organization (EPO), which uses a PPO care network but lacks an out-of-network benefit.
HAP’s extension across the state hinges on first forming ties with health systems and physician organizations. Those relationships will lead HAP’s entry into new markets, Genord said. He cited the four-county Medicare Advantage plan in West Michigan that resulted from Affinia Health Network, the physician organization at Mercy Health, reaching out to HAP.
“When we have like-minded providers who want to sit down and invest time and energy in building products, in building relationships, and putting the patient and member in the forefront of what we do, we begin to look at those relationships,” he said. “The strategy of growth is definitely there, but it’s founded on building relationships and building in markets where we can add value. So, our strategy will unfold as we look at these relationships and where it makes sense, and where we have willing partners, and then we can add value to whatever community we go to.”
In the small group market for employers with two to 49 employees, HAP intends to offer its 181,000-member HMO that comes with a limited care network in Mercy Health. HAP plans to seek state regulatory approval early in the first quarter of 2021 to extend the HMO coverage to West Michigan and wants to add to the care network with other providers in West Michigan, most notably Spectrum Health.
HAP “continually” engages with Spectrum Health, said Genord, noting the Henry Ford Health System has an agreement in place with the Spectrum-owned Priority Health.
“We are deeply committed and engaged to have a robust provider network in West Michigan, and that is going to have to include Spectrum at some point,” he said. “I think it’s fair to say that in 2021 you’ll hear about new providers that are working with us and that we have contracts with. I’m fairly confident in that.”
CEOs at the two health systems have had initial conversations about Spectrum becoming part of HAP’s HMO care network, said Spectrum Health Chief Financial Officer Matt Cox. Contract teams are scheduled to meet in October “to talk about opportunities,” Cox said.
“We certainly are really early in the process,” he said. “We certainly like HAP and think that they’re a good company and have a good relationship with them. We’ll see where it goes.”
HAP’s large group PPO product does include Spectrum Health in its care network.
Genord declined to identify other West Michigan care providers that HAP seeks to add to its care network with a reimbursement agreement, although “we’re in some type of discussion” with several others.
HAP’s entry into West Michigan offers another viable option to consider for employee health benefits, although the absence of Spectrum Health in the small group HMO’s care network may limit the health plan’s appeal for some employers until the two strike a deal, said Shannon Enders, managing partner at Lakeshore Employee Benefits in Norton Shores.
“It’s pretty tough to offer a health plan in Western Michigan that does not include the Spectrum providers. So, hopefully that can get done,” Enders said during a MiBiz webinar on health insurance (see page 12).
The PPO and EPO large-group products in West Michigan will use HAP’s existing care network and the network of Grand Rapids-based ASR Health Benefits, a HAP-owned third party administrator for employers that self-fund their health benefits.
Despite that “big hang up” and gap in HAP’s HMO care network for small employers, Enders welcomes a new competitor to the market.
“The Blues does a great job, Priority does a great job, but we could use some more competition. So, that’s probably going to be a good development and it’ll be interesting to see how that plays out,” Enders said.
Genord said he does not see the limited care network for the small group HMO as a barrier for employers to consider HAP.
“At the end of the day, what they (employers) want are health benefits that create value for their employees with a market-leading payer,” Genord said. “These employers want value, they want to be able to recover with the economy. So, where we thought there would be some trepidation, there is some excitement there about, ‘You have competitive rates, you can bring something different, we want to talk about it.’”
While further disruption for employees in what has been a tumultuous year is “certainly a dynamic,” there are also potential opportunities to save employees money, said Margaret Anderson, HAP’s senior vice president and chief sales and marketing officer.
“Where they can actually pass down those savings to help people out in the pandemic without compromising anything with respect to quality, there definitely is a willingness to listen and to look at things as an option,” Anderson said. “So, disruption certainly could be a concern, but I think folks are also trying to balance: ‘How could this potentially help our employees and help with the monthly cash flow crunch that people are feeling?’”
The COVID-19 pandemic could also affect interest in HAP, said David Smith, vice president of compensation services at The Employers’ Association in Grand Rapids. The pandemic has caused plenty of stress and disruption in every business — some employers may feel reluctant to introduce even more disruption in the mix, Smith said during MiBiz’s webinar.
Pricing will make the difference in whether employers consider the new player in the market, Smith said. A few percentage points in cost savings “probably means we’re going to stay with what we have,” he said.
A larger increase of 10 percent or more could lure employers to consider the new plan in the market, Smith said.
“West Michigan has had a lot of change already. COVID caused it. People aren’t changing just for the sake of changing. For small changes, for small differences, employers are looking to keep their employees as happy as they can,” he said.
At Lakeshore Employee Benefits, “We’re seeing customer after customer saying, ‘Nope. Don’t even bring us anything. There’s no way we’re making changes” in either insurance carrier or benefit packages, Enders said.
“I think they’re hunkered down in large part for employees’ peace of mind,” he said